Financial report is a document that showcases all the financial activities and performance of your business over a specific period (usually a quarter or a year). It includes a trial balance, income statement, cash flow statement, and other important information that helps you evaluate and understand company profitability and growth. Financial reports are usually created quarterly and yearly and are required by law for most public companies.
These documents are useful for many different stakeholders, from investors and potential partners to government regulators. They help you organize data and present it in a way that is easy to understand, so that you can make better decisions about your company’s future.
The financial reporting frameworks that guide those who create these reports are often international and industry standards like IFRS and GAAP. Understanding these guidelines can help you ensure that your financial statements are accurate, compliant, and comparable across businesses.
A trial balance is a list of the current balances in all general ledger accounts at a particular point in time. The income statement tracks a company’s revenues and expenses over a specified period to determine its profits or losses. It can be calculated using accrual accounting or direct method and presents a clear format that shows operating income, cost of goods sold, net sales, gross profit, and total costs.
The cash flow statement measures the inflows and outflows of cash within a company, with separate sections for operating, investing, and financing activities. This allows you to see whether your company generates enough cash to cover its investments and expenses, as well as highlight areas where your business may be relying on external funding.